Define a Sourcing Rule

This document explains how you manually define the rules for how to source items at a warehouse.

The sourcing rule can be used for these purposes:

Optimization, that is, to split the sourcing into different acquisition methods according to percentage shares
Distribution of the item from other warehouses according to a prioritized order.

Note that sourcing rules according to percentage shares can also be defined and optimized in M3 Supply Chain Planner (M3 SCP), and then transferred to, and implemented in, M3 BE.

Outcome

A sourcing rule for an item at a warehouse is defined. Information about sourcing rules is stored in these tables:

Item sourcing rules (MITSOR)
Received sourcing rules from M3 Supply Chain Planner (MSCTRA)
Disaggregated sourcing rules (MSCSOR).

The sourcing rule determines how the demand for the item at the warehouse should be met. The sourcing rule is activated during the reorder point calculation and material resource planning (MRP) calculation, when a demand occurs for the item at the warehouse.

Before you start

The item must be defined in 'Item. Open' (MMS001), and the 'Multiple supply' field must be set to 4-'Multiple source' for the item in 'Item. Connect Warehouse' (MMS002).
If manufacturing should be a sourcing alternative for the item, the 'Acquisition code' field must be set to 1-'Manufactured' for the item in (MMS002).
The warehouse that has a demand for the item must be defined in 'Warehouse. Open' (MMS005).
If the item should be distributed from another warehouse, that other warehouse must be defined in (MMS005).
If the item should be purchased, the supplier must be defined in 'Supplier. Open' (CRS620).
The order type for the order that is automatically created to meet the requirement should be defined in one of these programs: 'Manufacturing Order Type. Open' (PMS120), 'Purchase Order Type. Open' (PPS095), or 'Req/Distr Order Type. Open' (CRS200).

Follow these steps

Start 'Item. Define Sourcing Rules' (RPS090/B).

This instruction is based on sorting order 01.
Specify the warehouse and item for which the sourcing alternative should apply.
Specify a valid From date and a sequence number. Click Create.
On the E panel, specify a To date, if applicable.
Specify how the acquisition for the requirement should be done.

Note that if the sourcing should be done according to priority order, the acquisition code must be set to 3-'Distributed'.
Specify the source from which the requirement should be supplied.
Select one of these alternatives:
- If the sourcing should be done according to a percentage share, specify the alternative share (expressed in percentage).
- If the sourcing should be done according to priority order, select the 'ATP check' check box, the time horizon within which the check should be made in the 'ATP limit' field, and whether the ATP quantity found needs to cover the entire shortage quantity to be distributed.
- If the sourcing should be done according to maximum shortage quantity, specify a maximum quantity that could be sourced using the rule.
Specify how the remaining quantity should be calculated.
Specify the order type that should be used for creating the order policy that should be used to calculate the required quantity.
Specify the normal order quantity that should be used when the requirement arises, if applicable.
Specify the minimum or maximum order quantity for the order, if applicable.
Specify a multiple that the order quantity should be divisible by to avoid having to break up packages, for example. Press Enter.
Repeat all the steps above for each alternative in the sourcing rule for the specific item and warehouse.

Parameters to set

Note that only fields that need further explanations are listed in this table.


Program ID/Panel	Field	The field indicates …
(RPS090/B)	Sequence number	… the order in which the sourcing alternatives in a sourcing rule should be applied. If the sourcing should be done according to priority order, this is the field where you set the priority. Even though the sourcing should be done according to a percentage share, it is important to set up the sequence correctly since the sequence number affects the quantity calculation.
(RPS090/E)	Acquisition code	…how the acquisition should be done for an immediate or planned demand. Valid alternatives: 1=Manufacturing 2=Purchasing 3=Distribution from another warehouse.
(RPS090/E)	Source	… the source from where the required quantity should be supplied. If the item should be manufactured (acquisition code 1) or maintained (acquisition code 4), you leave this field blank. If the item should be distributed from another warehouse (acquisition code 3), you specify the ID of that warehouse. If the item should be purchased (acquisition code 2), you specify the supplier ID.
(RPS090/E)	Share	… the percentage of the requested shortage quantity that should be supplied from the specified replenishment source. Note: This field is only used if the sourcing should be done according to a percentage share. The sum of shares for all sourcing rule alternatives must always equal 100. If a combination of sourcing according to percentage and priority order is used, the shares for the alternatives using percentage should still equal 100.
(RPS090/E)	Max short qty	… the maximum quantity of the requested shortage that should be supplied from the specified replenishment source. Note: This field is only used if the sourcing should be done according to maximum quantity that can be supplied to a requirement. This field works together with split rule. Example: A customer order has a requirement of 150 qty. There are two sourcing rules for the warehouse-item set in (RPS090). Sourcing Rule 1: Acquisition code is 'Distribution' Source is 'Warehouse1' Maximum shortage quantity is '80' Split rule is 1-'Split allowed' ATP is not checked Sourcing Rule 2: Acquisition code is 'Distribution' Source is 'Warehouse2' Maximum shortage quantity is '60' Split rule is 2-'Split not allowed' ATP is not checked The first sourcing rule from 'Warehouse1' is used even if the maximum shortage quantity is less than the requirement because split is allowed. A distribution order is created with the quantity equal to the maximum shortage quantity, 80qty. The remaining shortage is now 70qty. The second rule will not be used to source the remaining shortage because this rule does not allow split. Since there are only two sourcing rules, the remaining shortage will be sourced based from the acquisition set in (MMS002). If ATP is selected, the available quantity of the source is also used to determine if the rule is to be used for sourcing.
(RPS090/E)	ATP check	… if you want the sourcing alternative to check the available quantity at another warehouse before continuing with the next sourcing alternative or the standard acquisition method. Note: This field is only used if the sourcing should be done according to priority and the acquisition code is set to 3-'Distribution'.
(RPS090/E)	ATP limit	… the time horizon within which the ATP check should be made. In other words, when a shortage occurs this field determines whether the ATP check should be made. Valid alternatives: 1=Planning time fence 2=Planning horizon. If alternative 1 is selected, a check for available quantity will only be made if a shortage occurs within the planning time fence. If alternative 2 is selected, a check for available quantity will always be made. Note: This field is only used if the sourcing should be done according to priority and the acquisition code is set to 3-'Distribution'.
(RPS090/E)	Split rule	… whether the ATP quantity found during an ATP check needs to cover the entire shortage quantity to be distributed to the warehouse. Valid alternatives: 1=Split is allowed. Any existing ATP quantity can be used. 2=Split is not allowed. The ATP quantity must cover the entire shortage. Otherwise, the ATP quantity will not be used. If alternative 1 is selected, the next sourcing alternative will be used to check for the remaining shortage. Note: This field is only used if the sourcing should be done according to priority and the acquisition code is set to 3-'Distribution'.
(RPS090/E)	Remaining quantity method	… how the remaining quantity should be calculated. Valid alternatives: 1=Remaining shortage quantity is used. 2=Estimated shortage quantity is used. The reason for this field is that since different factors affect the quantity calculation, the original required quantity multiplied by the percentage share does not always equal the remaining shortage quantity. This field determines how to manage this discrepancy. If alternative 1 is selected and the original required quantity multiplied by the percentage share is greater than the remaining shortage quantity, the remaining shortage quantity is used. If alternative 2 is selected, the original required quantity multiplied by the percentage share is used even if it is greater than the remaining shortage quantity. Examples: There is a requirement for 400 pieces of an item. Sourcing alternative 001 has manufacturing as the acquisition code and 50% as the share. Sourcing alternative 002 has purchasing as the acquisition code and 50% as the share. Alternative 1: 300 pieces will be manufactured. (400 multiplied by 50% is 200. However, this is adjusted to 300 since this is the order quantity for the alternative.) 100 pieces will be purchased. (400 multiplied by 50% is 200. However, this should be adjusted to the remaining shortage quantity, which is 400 minus 300.) Alternative 2: 300 pieces will be manufactured. (400 multiplied by 50% is 200. However, this is adjusted to 300 since this is the order quantity for the alternative.) 200 pieces will be purchased. (400 multiplied by 50% is 200. This quantity will be used even though the remaining shortage quantity is only 100.)
(RPS090/E)	Order type	… a combined ID for settings that determine how the order is processed during order entry and in the processing flow. "Order" in this context refers to the order created to meet the requirement.
(RPS090/E)	Order policy	…the process for calculating the order quantity. Valid alternatives – fixed quantity/variable period: 00=Manually specified quantity 01=Fixed quantity calculated from run-out time 02=Economic order quantity – Wilson's formula Valid alternatives – variable quantity/fixed period: 11=Discreet order quantity Note: If material resource planning (MRP) is used, all alternatives can be selected. If reorder point is used, only alternatives 00, 01, and 02 can be used. For more detailed information, refer to the field help.
(RPS090/E)	Order quantity	… the normal order quantity that should be used for the order that is created to meet the requirement, expressed in the item's basic unit of measure.
(RPS090/E)	Min/max order quantity	…the minimum/maximum order quantity allowed for the order that is created to meet the requirement.
(RPS090/E)	Order multiple	… the order multiple quantity in the item's basic unit of measure. The order multiple is used to round off quantities upwards. This field is used to avoid having to break up packages, for example. Example: The items are packed in packages of ten items each. The order multiple is set to 10. Any requirement should be met by distribution from another warehouse. The required quantity is 267. The quantity on the order will be 270.